The next annual report I read was UOB. It’s clear that ASEAN is the focus for the next few years. The potential is definitely there but risk comes from the execution and integration. I am hopeful given that the group already has a presence in these markets and management has a proven track record in acquisition.

Being able to seize the opportunity to acquire Citigroup’s consumer banking businesses in four ASEAN markets during the midst of the pandemic and funded by internal capital speaks a lot about the leadership. My sense from just reading his message is that he is prudent but can be bold and decisive when required.

It is definitely pleasing to read the FY2022 results, given that it is better than pre-covid period. Despite the higher interest in SSB and T-bills last year, the group still managed to to increase its customer deposits!

What do I expect in the coming year? (Not a recommendation)

All is good but what about 2023? CEO has shared that the acquisition is expected to bring in additional revenue of $1b in 2023. Net interest margin should also stay around at the same level. So unless there is a sudden spike of non-performing loan due to recession, a 10% increase in EPS seems plausible. Using the average PE of 10.80, then I am looking at a price of $31.9 by early 2024. I get a the same price if I assume dividend to be $1.50 and dividend yield stays at around 4.7%.

If my estimation is correct (more likely to be wrong!), then there is not much upside from the current price $30. However, if we include dividend, then it is still a good 10% return.

At the time of writing, UOB takes up 2.1% of my portfolio.